Snapshot of the Freight Forwarding Market in India

Economic growth and increased international trade means India's freight forwarding market is expected to enjoy considerable expansion over the next few years. With the economic outlook generally healthy, foreign direct investment (FDI) on the rise and the transport infrastructure of India due to witness major improvements, freight forwarders and logistics companies look set to reap the benefits.

The pharmaceuticals industry will be one of the main drivers of demand for freight forwarding services. The value of the India pharma market is forecast to grow from $12.6 billion to $55 billion (£8.2 billion to £36 billion) by 2020, by which point it will account for eight per cent of global pharmaceutical production.

India's pharma industry is already the third largest in the world in terms of production volume, with branded generics continuing to dominate the business models of many companies.

Focusing on the production of cheaper versions of branded drugs once their patent protection runs out has proved an effective strategy for Indian pharma companies. Last year, Gurgaon-based Ranbaxy achieved revenues of $600 million over a six-month period from sales of a generic version of Pfizer's blockbuster cholesterol treatment Lipitor.
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Another wave of big-name drugs will see their patents expire over the next three years, which makes Indian manufacturers well-placed to capitalise on the huge demand for generic alternatives in the US and Europe. The market for medicines losing patent protection by 2015 is worth an estimated $250 billion. In October last year, the Indian government announced its intention to capture a share of this market worth between $30 and $40 billion with the launch of its Brand India Pharma campaign.

"We want to send out a message to the world that we have the capacity to fill in this space with high-quality yet cheap medicines," said additional commerce secretary Rajeev Kher in comments reported by the Economic Times.

With the international export of generic drugs from Indian manufacturers therefore set to increase significantly, freight forwarding providers look set to benefit from buoyant demand.

Recent reports, such as Freight Forwarding Market in India 2012 by Research and Markets and this month's Logistics Services Market in India 2013 by Netscribes, have noted how the growth in international trade is driving an increased need for logistics services in India, including freight forwarding.

However, certain challenges remain for pharmaceutical manufacturers and the freight forwarders they partner with. Chief among these is the complex regulatory environment surrounding the temperature controlled supply of lie sciences in India.

This issue, which will be on the agenda at this year's Cold Chain India event in Mumbai in May, creates several obstacles for companies. Restrictions on FDI in retail prevent overseas firms from investing in the necessary cold chain infrastructure, while the majority of cold storage facilities are located in a handful of states, making them inaccessible to some users.

David Cameron made an official visit to India this week in a bid to strengthen economic ties with the UK. The prime minister encouraged a more open and flexible business relationship between the two countries, calling for India to give British organisations an incentive to invest by cutting regulation and red tape. Implementing such changes in the area of temperature controlled logistics could certainly create new opportunities for multinational pharma firms, Indian manufacturers and freight forwarding providers.